NMSS Nms Communications (MM)

NMS Communications Corporation (NASDAQ: NMSS), a leading provider of applications and platforms for value-added services in mobile telecommunications today announced financial results for the third quarter ended September 30, 2008. These results are in line with the preliminary results that were announced on Thursday, October 23, 2008. Total revenues from continuing operations for the third quarter of 2008 were $16.2 million, a decrease of 24% compared to $21.2 million for the corresponding quarter in 2007, and a decrease of 5% compared to $17.1 million for the second quarter of 2008. Loss from continuing operations for the third quarter of 2008 was $(7.1) million, or $(0.16) per share, compared to a loss from continuing operations of $(1.4) million, or $(0.03) per share, for the third quarter of 2007. Net loss for the third quarter of 2008 was $(7.1) million, or $(0.16) per share, compared to a net loss of $(1.5) million, or $(0.03) per share, for the third quarter of 2007. Non-GAAP loss from continuing operations was $(4.4) million, or $(0.10) per share, for the third quarter of 2008, compared to non-GAAP income from continuing operations of $0.1 million, or $0.00 per share, in the third quarter of 2007. A complete reconciliation between income (loss) from continuing operations and income (loss) from continuing operations per share figures on a GAAP basis and a non-GAAP basis is provided in the financial tables at the end of this press release. Cash, cash equivalents and marketable securities totaled $4.6 million on September 30, 2008, compared to $9.3 million at the end of the previous quarter. About NMS Communications Corporation NMS Communications Corporation (NASDAQ:NMSS) is a leading provider of applications, platforms and technologies that make possible the rapid creation and deployment of a broad range of value-added services, from voice mail to IVR to ringback and mobile TV. Visit www.nmss.com for more information. This press release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, including forward-looking statements about our expected future financial and operating performance, demand for and performance of our products and growth opportunities. These statements are based on management's expectations as of the date of this document and are subject to uncertainty and changes in circumstances. Actual results may differ materially from these expectations due to risks and uncertainties. These and other risks are detailed from time to time in the Company's filings with the Securities and Exchange Commission, including the Company's annual report on Form 10-K for the year ended December 31, 2007. In addition, while management may elect to update forward-looking statements at some point in the future, management specifically disclaims any obligation to do so, even if its estimates change. Any reference to our website in this press release is not intended to incorporate the contents thereof into this press release or any other public announcement. Use of Non-GAAP Financial Measures In addition to reporting its financial results in accordance with generally accepted accounting principles, or GAAP, the Company has also provided in this release non-GAAP income (loss) from continuing operations, non-GAAP income (loss) from continuing operations per share figures, non-GAAP net income (loss), and non-GAAP net income (loss) per share figures, which are non-GAAP financial measures adjusted to exclude certain non-cash and other specified expenses. The Company believes the use of non-GAAP measures in addition to GAAP measures is an additional useful method of evaluating its results of operations. Management uses these non-GAAP financial measures when evaluating the Company's financial results, as well as for internal planning and forecasting purposes. Specifically, the Company has excluded stock-based compensation, the other-than-temporary impairment of Verso common stock, transaction costs related to the proposed sale of the NMS Communications Platforms business and amortization of intangible assets from its non-GAAP financial measures. The non-GAAP financial measures disclosed by the Company should not be considered a substitute for, or superior to, financial measures calculated in accordance with GAAP, and the expected results calculated in accordance with GAAP and reconciliations to those expected results should be carefully evaluated. The non-GAAP financial measures used by the Company may be calculated differently from, and therefore may not be comparable to, similarly titled measures used by other companies. A reconciliation between these non-GAAP financial measures on a GAAP basis and a non-GAAP basis is provided in a table at the end of this press release. NMS Communications is a trademark of NMS Communications Corporation. All other brand or product names may be trademarks or registered trademarks of their respective holders. NMS COMMUNICATIONS CORPORATION Consolidated Statements of Operations � � � � � � Three Months Ended Nine Months Ended September 30, September 30, 2008 2007 2008 2007 (Unaudited and in thousands) � Revenues $ 16,153 $ 21,173 $ 52,418 $ 59,773 � Cost of revenues � 7,174 � � 7,372 � � 21,838 � � 23,131 � � Gross profit 8,979 13,801 30,580 36,642 56 % 65 % 58 % 61 % Operating expenses: Selling, general and administrative 10,750 10,580 32,013 31,049 Research and development 5,327 4,338 15,937 13,650 Restructuring � 39 � � - � � 1,454 � � - � Total operating expenses � 16,116 � � 14,918 � � 49,404 � � 44,699 � � Operating loss (7,137 ) (1,117 ) (18,824 ) (8,057 ) � Other income (expense), net � 126 � � (47 ) � (1,815 ) � 363 � � Loss from continuing operations before income taxes (7,011 ) (1,164 ) (20,639 ) (7,694 ) Income tax expense � 103 � � 248 � � 594 � � 319 � � Loss from continuing operations (7,114 ) (1,412 ) (21,233 ) (8,013 ) � Loss from discontinued operations (net of income tax benefit of $0, $24, $0 and $73, respectively) - (105 ) - (1,677 ) Loss on disposal of discontinued operations � - � � - � � (367 ) � - � � Net loss $ (7,114 ) $ (1,517 ) $ (21,600 ) $ (9,690 ) � � Net loss from continuing operations per common share-basic and diluted $ (0.16 ) $ (0.03 ) $ (0.47 ) $ (0.18 ) � Net loss per common share-basic and diluted $ (0.16 ) $ (0.03 ) $ (0.48 ) $ (0.22 ) � Shares used in net loss per common share-basic and diluted � 45,730 � � 44,116 � � 45,297 � � 43,892 � NMS COMMUNICATIONS CORPORATION Condensed Consolidated Balance Sheet � � � September 30, December 31, 2008 2007 (Unaudited) (In thousands) � ASSETS Current assets: Cash and cash equivalents $ 4,623 $ 20,179 Marketable securities - 9,993 Accounts receivable, net of allowance for doubtful accounts of $222 and $113, respectively 10,043 13,762 Inventories 2,843 2,720 Prepaid expenses and other assets � 2,846 � 3,414 Total current assets � 20,355 � 50,068 � Property and equipment, net 3,980 5,096 Goodwill 11,170 5,427 Intangible assets, net 12,078 4,185 Other assets, net � 2,812 � 2,964 Total assets $ 50,395 $ 67,740 � LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 4,275 $ 6,846 Accrued expenses and other liabilities 5,949 7,557 Accrued restructuring, current portion 1,288 938 Capital lease obligations, current portion 313 - Revolving line of credit 3,805 - Deferred revenue � 4,495 � 3,414 Total current liabilities � 20,125 � 18,755 Accrued restructuring, long term portion 1,621 1,811 Capital lease obligations, long term portion 245 - Accrued warranty � 48 � 171 Total liabilities � 22,039 � 20,737 Stockholders' equity � 28,356 � 47,003 Total liabilities and stockholders' equity $ 50,395 $ 67,740 NMS COMMUNICATIONS CORPORATION Unaudited Reconciliation of Non-GAAP Measures to Comparable GAAP Measures � � � � � � � � � Three Months Ended Nine Months Ended September 30, September 30, 2008 2007 2008 2007 (Unaudited) (Unaudited) � (In thousands, except per share data) Income (loss) from continuing operations GAAP loss from continuing operations $ (7,114 ) $ (1,412 ) $ (21,233 ) $ (8,013 ) Plus: Stock-based compensation 562 1,228 3,045 3,827 Amortization of identified intangible assets 1,126 292 2,695 876 Transaction costs related to proposed sale of NMS CP business 1,013 - 1,013 - Other-than-temporary impairment loss on marketable securities � - � � - � � 1,881 � � - � Non-GAAP income (loss) from continuing operations $ (4,413 ) $ 108 � $ (12,599 ) $ (3,310 ) � Loss from continuing operations per common share, basic and diluted GAAP loss from continuing operations per common share, basic and diluted $ (0.16 ) $ (0.03 ) $ (0.47 ) $ (0.18 ) Plus: Stock-based compensation 0.01 0.03 0.07 0.09 Amortization of identified intangible assets 0.03 - 0.06 0.02 Transaction costs related to proposed sale of NMS CP business 0.02 - 0.02 - Other-than-temporary impairment loss on marketable securities � - � � - � � 0.04 � � - � Non-GAAP loss from continuing operations per common share, basic and diluted $ (0.10 ) $ - � $ (0.28 ) $ (0.07 ) � Net income (loss) GAAP net loss $ (7,114 ) $ (1,517 ) $ (21,600 ) $ (9,690 ) Plus: Stock-based compensation 562 1,228 3,045 3,827 Amortization of identified intangible assets 1,126 292 2,695 876 Transaction costs related to proposed sale of NMS CP business 1,013 - 1,013 - Other-than-temporary impairment loss on marketable securities � - � � - � � 1,881 � � - � Non-GAAP net income (loss) $ (4,413 ) $ 3 � $ (12,966 ) $ (4,987 ) � Net loss per common share, basic and diluted GAAP net loss per common share, basic and diluted $ (0.16 ) $ (0.03 ) $ (0.48 ) $ (0.22 ) Plus: Stock-based compensation 0.01 0.03 0.07 0.09 Amortization of identified intangible assets 0.03 - 0.06 0.02 Transaction costs related to proposed sale of NMS CP business 0.02 - 0.02 - Other-than-temporary impairment loss on marketable securities � - � � - � � 0.04 � � - � Non-GAAP net loss per common share, basic and diluted $ (0.10 ) $ - � $ (0.29 ) $ (0.11 ) � Shares used in computing basic and diluted Non-GAAP net loss per common share � 45,730 � � 44,116 � � 45,297 � � 43,892 � � Gross profit GAAP gross profit $ 8,979 $ 13,801 $ 30,580 $ 36,642 Plus: Stock-based compensation 21 39 65 127 Amortization of identified intangible assets � 979 � � 265 � � 2,342 � � 794 � Non-GAAP gross profit $ 9,979 � $ 14,105 � $ 32,987 � $ 37,563 � � Total expenses Total Non-GAAP expenses $ 20,589 $ 20,770 $ 64,489 $ 63,127 Plus: Stock-based compensation Cost of revenue 21 39 65 127 Selling, general and administrative 493 1,122 2,839 3,394 Research and development � 48 � � 67 � � 141 � � 306 � Total stock-based compensation 562 1,228 3,045 3,827 Amortization of intangible assets Cost of revenue 979 265 2,342 794 Selling, general and administrative � 147 � � 27 � � 353 � � 82 � Total amortization of intangible assets 1,126 292 2,695 876 Transaction costs related to proposed sale of NMS CP business Selling, general and administrative � 1,013 � � - � � 1,013 � � - � Total transaction costs related to proposed sale of NMS CP business � 1,013 � � - � � 1,013 � � - � Total GAAP expenses $ 23,290 � $ 22,290 � $ 71,242 � $ 67,830 �